Monday brainstorming

1. The correction started on Friday though tainted by one of those pathetic late PPT buying sprees with the usual suspect Apple driving markets higher with the insane recovery of Lınkin. The very bad payroll data which only stayed positive as last month due to the made up birth/death bringing the positive aspect to a realy negative reality. With Uranus going stationary on the weekend in a T-Square the sovereign debt crisis got emphasized again adding a new acute member of the PIIGS club to the mix – Italy- with now all members activated. Italy which is already at 120% debt to GDP ratio , with some hidden negative suprises to be a sure bet and the Spanish depression o top of the already known smaller countries brings the EU on the brink of collapse with rising pressure in Germany that more bailouts will not find support in the population.

With 2 looming major events by Friday as the stress test of EU banks will be published and the USA has to reach a debt ceiling agreement or a rating agency alert is due and driving USA closer to a technical default which can not be handled right now with so many sovereign debt at risk it will trigger a sell off worse than Lehman. I guess it will be again a weekend cliff hanger with a Full Moon in Capricorn on the 15th ahead. Astrology though sees second part of July rather on the upside especially in the last week starting around the 20th July as heliocentric Mercury enters Sagittarius which usually triggers a spike in currencies and Gold with an upside bias for stocks as well.

The NDX has already made it back to the high and Apple broke out of a consolidation pattern which gives an upside target of 390. Since the oversold sentiment has turned to neutral territory with my major sentiment indicators the Rydex and ISE MA’s remaining bearish we still have more upside to do. The scenario is we turn around from here and enter into a crash right away less likely – only a major event like an USA default could trigger that or a huge EU bank going bankrupt but that will rather be covered by another bailout of the EU for now and we can also expect some tainted compromise over the debt ceiling to be reached soon and the can kicked down the street again.

The strange rally the last 2 weeks which was only unexpected in its magnitude was accompanied by heavy put buying activity the only similar time was back in the Lehman times but sentiment is overall more negative now actually. Expect this week to be a downside correction mostly and later next week even starting Monday another upside wave – I will take care of details on the charts updates.

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Obama To Address Nation At 11:00 AM, Announcing Lack Of Agreement On Debt Ceiling, Or T Minus 10 Working Days Until T-Day

After meeting for exactly 75 minutes, the president and members of congress achieved absolutely nothing except for what ZH readers already knew: that a debt deal has to be reached by July 22 or else. “President Barack Obama said Sunday that “we need to” work out a debt deal within the next 10 days as he convened a meeting with congressional leaders, aiming to fashion a deficit reduction package for the next 10 years. As the meeting opened, Obama and the leaders sat around the table in Sunday casual dress. Asked whether the White House and Congress could “work it out in 10 days,” Obama replied, “We need to.” Despite Boehner’s preference for a smaller, $2 trillion plan for deficit reduction, White House aides said Sunday that Obama would press the lawmakers to accept the larger deal. Republicans object to its substantial tax increases and Democrats dislike its cuts to programs for seniors and the poor. The aides, however, left room for negotiations on a more modest approach.” And just like on Friday when the president’s appearance was heralded as a harbinger of a massive NFP beat only to be the biggest let down since Geithner’s TV appearances in February which sent the market down by 10 S&P points each time, so the president will address the nation tomorrow. From Reuters: “U.S. President Barack Obama will hold a news conference at 11 a.m. EDT (1500 GMT) on Monday about the status of negotiations to cut the deficit and raise the debt ceiling, the White House said on Sunday. Obama met with congressional leaders for about 75 minutes Sunday evening and will meet again with them on Monday “to discuss the ongoing efforts to find a balanced approach to deficit reduction,” the White House said, without giving a time for that session.”